What is the Stock Market?

The stock market is seemed like an exclusive club that’s reserved for the Ultra-Wealthy. In Reality, however, it’s a great way for more people to become investors and build their savings.

What is “Stock Market”?

Before starting any new task, it is important to learn the basics. A stock Market is also known as stock exchange. In Simple terms, It’s a set of exchanges where companies’ issues securities for trading, such as Bonds and Shares. It is a place where buyers and sellers assemble to trade stocks. Before the Internet, Traders would gather at the trading ring to buy and sell stocks. Nowadays, However, all trades are executed with the help of Internet at Brokers office.

India’s leading Stock Exchange Includes the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE)

How does Stock Market Work?

When you invest in a company, you’re buying shares of that company’s stock. Each share represents a portion of the company and a percentage of its profits.

The Stock Market works when the exchanges of securities at National stock exchange or Bombay stock exchange. A Stock broker or an Individual can only trade company stocks or other securities, if it is listed on a Stock exchange. The process of companies listing in stock exchange is called Initial Public Offering (IPO). Furthermore, IPO enables the companies to raise capital from the markets.

During the Listing, the company divides a portion of itself which they have to offer to the new shareholders at a price per share. Investors will buy the shares in advance to expect the price will rise or for the dividends or for both. Investors can then, buy and sell the securities they already own in what is called the secondary market.

In the secondary Market, A seller is selling a stock which they owned primarily, seller ask for a price in exchange. On the Other hand, A buyer offers a bid or matches the amount in order for a trade to occur.

How Stock Market are regulated in India

Securities and exchange board of India (SEBI) regulates the entire stock market. In 1992, It was established as an autonomous body, means it works independently of the government and without political pressure. It plays a vital role and protects the interest of investors in the stock exchange of entire country.
SEBI has the power to govern the laws of the stock exchange. It has the authority to inspect the books and financial records of the stock market exchanges. In addition, SEBI can also limit the companies for getting listed on any stock exchange.
There are certain mandatory requirements for stock market exchanges, including quarterly financial reports submission, reports of corporate development. Misconduct of the regulations can lead to suspension or other sanction.

Difference Between Equities and Derivatives

There are two types of products in stock market: Equities and Derivatives

How to Start investing in the stock market?

You can start investing by the online mode or the offline mode

You don’t have to officially become an “investor” to invest in stock market.

Pros And Cons of investing in Stock Market

Pros

There are many benefits to investing in the stock market including

Diversification: There are many companies listed in the stock exchange, which gives you an opportunity to invest in different companies and diversify your Portfolio. The benefit of diversifying your portfolio is, let us consider if one of the companies which you have invested in, failed. You will have other investments to maintain the loss as you’re not totally out.
Low Entry Point: you can start investing in the stock market with just 50$. This is much lower than other investments, like real estate, where you often need to start with thousands of dollars
Liquidity: You can easily take out your money whenever you need it by selling your stocks.
Potential of Growth: As the data shows that on 25^th July 1990 the Sensex for the first time touched four-digit number 1001 and nowadays it is fluctuating around 50000 and growing. In future, who knows where it will land, but as the history says it will reach for the greater high.

Cons

Here are few cons of investing in stock market.

Risk: A great price comes with greater risk. Although, you have opportunity to earn good profits from your initial amount. It also has a risk factor which is to lose your money.
Tax: When you sell a stock for a profit, you will be liable to pay Capital Gain Taxes. Apparently, there is no tax applicable, if you’re selling your investment in loss.
Emotional Factor: There is fluctuations in stock prices on a day-to-day basis. Which can affect your decision to make profit in stock market out of fear of loss or greed of profit.

Summing Up

Given my above research and knowledge I would like to conclude that, one has a huge potential to earn money in the stock market. Diversifying the portfolio will help an investor to reduce the risk of loss on initial investment. Before Investing do your research to understand the market better, the ability to earn money through stock market comes from consistent research and practice.

Key Takeaways

The Stock Market is a place where the Buyers and sellers exchange shares of different companies that are listed and traded.

When you invest in a company, you’re buying shares of that company’s stock. Each share represents a portion of the company and a percentage of its profits.

India has stock exchanges which includes National stock Exchange (NSE), Bombay Stock Exchange (BSE), Metropolitan stock Exchange (MSE), Multi commodity Exchange (MCE) and National Commodity and Derivatives Exchange.

Stock Market enables the entrepreneurs to raise capital from the markets

One has to open a demat account and trading account with a registered Depository Participant (DP), to buy and sell stocks in India.

A Stock Broker or an Individual can only trade company stocks or other securities, if it is listed on an exchange.